Circular No. 142/1998/TT-BTC supplements and amends Circular No. 116-TC/DT dated December 24, 1994 on the management and use of 80 million NDT under the ODA loan agreement with the Government of China.

CIRCULAR

GUIDELINES FOR COMPLEMENTING AND AMENDING CIRCULAR NO. 116 TC/DT OF DECEMBER 24, 1994 ON THE MANAGEMENT AND USE OF 80 MILLION NDT UNDER THE ODA LOAN AGREEMENT BETWEEN THE GOVERNMENTS OF VIETNAM AND CHINA
OF THE ODA LOAN AGREEMENT BETWEEN THE GOVERNMENTS OF VIETNAM AND CHINA

Pursuant to Decree No. 87/CP dated August 5, 1997 of the Government on the issuance of the Regulation on Management and Use of Official Development Assistance (ODA) Sources.

Pursuant to the Economic and Technical Cooperation Agreement signed on December 2, 1992 between the Government of the Socialist Republic of Vietnam and the Government of the People's Republic of China.

Pursuant to Circular No. 6237/QHQT dated November 8, 1994 of the Office of the Government on the use of the 80 million NDT credit from China.

Pursuant to Circular No. 4242/QHQT dated August 29, 1996 of the Office of the Government on changing the purpose of using 30 million NDT under the aforementioned 80 million NDT credit.

After reaching consensus with relevant agencies, the Ministry of Finance issues guidelines for complementing and amending Circular No. 116 TC/DT dated December 24, 1994 on the management and use of 30 million NDT under the 80 million NDT ODA loan from the Government of China as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. Purpose of Use: The preferential loan amount of 30 million NDT from the Government of China previously allocated for water supply projects in northern mountainous provinces shall now be transferred to enterprises built with Chinese assistance for technological equipment renewal. Specific projects will be determined by competent authorities in accordance with the Regulation on Management and Use of Official Development Assistance issued together with Decree No. 87/CP dated August 5, 1997 of the Government.

2. The Ministry of Finance entrusts the General Department of Investment and Development to implement the re-lending of the aforementioned loan, responsible for recovering the debt for the State Budget and entitled to fees as prescribed.

3. Method of Withdrawal: The Foreign Trade Bank is the transaction bank including foreign exchange settlement activities, maintaining a ledger for tracking withdrawals and being entitled to service fees according to the current "Service Fee Schedule" of the Vietnam Foreign Trade Bank. Projects utilizing the 30 million NDT under the loan agreement signed on December 2, 1992 shall apply the direct payment withdrawal method stipulated in the Bank Agreement between the Vietnam Foreign Trade Bank and the Chinese Bank.

II. SPECIFIC PROVISIONS:

1. Conditions for Re-lending:

- The interest rate for re-lending is 4% annually on the outstanding principal, wherein the re-lending fee for the General Department of Investment and Development is 0.3%/year on the outstanding principal for loans valued below 3 million USD with a term of less than 12 years; 0.25%/year on the outstanding principal for loans valued below 3 million USD with a term of more than 12 years; 0.2%/year on the outstanding principal for loans valued above 3 million USD. Transaction fees in international payment transactions shall be directly paid by the project investor or the entrusted import unit (in accordance with the entrusted import contract) to the serving bank based on actual occurrences.

- The overdue interest rate is 150% of the re-lending interest rate.

- The re-lending term is determined by the Ministry of Finance (Department of Foreign Financial Affairs and General Department of Investment and Development) based on the approved investment project and shall not exceed the remaining term of the China loan agreement (maximum loan term until 2012; maximum grace period until 2002).

2. Currency for Debt Repayment and Exchange Rate:

- The currency for debt repayment is Renminbi (RMB). The debtor may repay the Ministry of Finance in RMB, VND, or freely convertible foreign currencies.

- In case of repayment in VND, the applicable exchange rate for converting VND to RMB is the average inter-bank RMB/VND rate published by the State Bank every ten days. This rate will be announced by the General Department of Investment and Development via fax to local investment departments upon receipt of the State Bank's notification.

- In case of repayment in USD or other strong foreign currencies: it shall be applied in accordance with Circular No. 3000 TC/TCDD dated August 10, 1998 of the Ministry of Finance guiding the exchange rate for debt recovery.

3. Responsibilities of Relevant Agencies:

- The Department of Foreign Financial Affairs of the Ministry of Finance is responsible for signing the Entrusted Re-lending Contract with the General Department of Investment and Development; monitoring the loan withdrawal process, arranging funds for debt repayment when due, and processing budget entries and exits.

- The General Department of Investment and Development of the Ministry of Finance is responsible for signing the credit contract for re-lending with investors according to the specified conditions; monitoring the implementation of projects, recovering debts, and reporting to the Ministry of Finance on the debt recovery situation every six months. Upon recovery of the loan capital, the General Department of Investment and Development system shall immediately repay into the State Budget.

- Investors are responsible for signing the re-lending contract with the General Department of Investment and Development, implementing procurement procedures for equipment in accordance with current regulations while considering the special conditions of the Chinese loan. Investors shall directly or cooperate with entrusted import units to negotiate and sign commercial contracts with Chinese counterparts, ensuring that the value of the portion of the contract funded by the loan does not exceed the value in RMB of the signed credit contract. Investors are responsible for repaying the principal and interest in accordance with the terms stipulated in the credit contract.

- After the commercial contract has been approved by the Ministry of Industry and Trade, the Ministry of Finance will proceed with the contract approval process and send it to the Vietnam Foreign Trade Bank for guidance to investors on the execution of foreign exchange settlement procedures in accordance with the direct payment withdrawal method consistent with the Bank Agreement signed with the Chinese side. Upon receiving the withdrawal notice from the Chinese Bank, the Vietnam Foreign Trade Bank will notify the Ministry of Finance to process budget entries and exits.

III. IMPLEMENTATION PROVISIONS:

This Circular takes effect fifteen days from the date of signature. During the implementation process, if there are any difficulties, please promptly reflect them to the Ministry of Finance for consideration and resolution.